Xi’s Dictatorship Threatens the Chinese State
By George Soros, 8/13/21, Wall St. Journal

Xi Jinping, the ruler of China, suffers from several
internal inconsistencies which greatly reduce the cohesion
& effectiveness of his leadership. There is a conflict
between his beliefs & his actions & between his public
declarations of wanting to make China a superpower & his
behavior as a domestic ruler. These internal contradictions
have revealed themselves in the context of the growing
conflict between the U.S. and China.

At the heart of this conflict is the reality that the
two nations represent systems of governance that are
diametrically opposed. The U.S. stands for a democratic,
open society in which the role of the govt is to protect
the freedom of the individual. Xi believes Mao Zedong
invented a superior form of org, which he is carrying on:
a totalitarian closed society in which the individual is
subordinated to the one-party state. It is superior, in
this view, because it is more disciplined, stronger &
therefore bound to prevail in a contest.

Relations between China & U.S. are rapidly deteriorating
& may lead to war. Xi has made clear that he intends to
take possession of Taiwan within the next decade, & he is
increasing China’s military capacity accordingly.

He also faces an important domestic hurdle in 2022, when
he intends to break the established system of succession
to remain president for life. He feels that he needs at
least another decade to concentrate the power of the
one-party state & its military in his own hands. He knows
that his plan has many enemies, & he wants to make sure
they won’t have the ability to resist him.

It is against this background that the current turmoil in
the financial markets is unfolding, catching many people
unaware and leaving them confused. The confusion has
compounded the turmoil.

Although I'm no longer engaged in the financial markets,
I used to be an active participant. I have also been
actively engaged in China since 1984, when I introduced
Communist Party reformers in China to their counterparts
in my native Hungary. They learned a lot from each other,
& I followed up by setting up foundations in both countries.
That was the beginning of my career in what I call political
philanthropy. My foundation in China was unique in being
granted near-total independence. I closed it in 1989, after
I learned it had come under the control of the Chinese govt
& just before the Tiananmen Sq. massacre. I resumed my
active involvement in China in 2013 when Xi became the
ruler, but this time as an outspoken opponent of what has
since become a totalitarian regime.

I consider Xi the most dangerous enemy of open societies
in the world. The Chinese people as a whole are among his
victims, but domestic political opponents & religious &
ethnic minorities suffer from his persecution much more.
I find it particularly disturbing that so many Chinese
people seem to find his social-credit surveillance system
not only tolerable but attractive. It provides them social
services free of charge & tells them how to stay out of
trouble by not saying anything critical of Xi or his regime.
If he could perfect the social-credit system & assure a
steadily rising standard of living, his regime would become
much more secure. But he is bound to run into difficulties
on both counts.

To understand why, some historical background is necessary.
Xi came to power in 2013, but he was the beneficiary of the
bold reform agenda of his predecessor Deng Xiaoping, who
had a very different concept of China’s place in the world.
Deng realized that the West was much more developed & China
had much to learn from it. Far from being diametrically
opposed to the Western-dominated global system, Deng wanted
China to rise within it. His approach worked wonders. China
was accepted as a member of the WTO in 2001 with the
privileges that come with the status of a less-developed
country. China embarked on a period of unprecedented growth.
It even dealt with the global financial crisis of 2007-08
better than the developed world.

Xi failed to understand how Deng achieved his success. He
took it as a given & exploited it, but he harbored an
intense personal resentment against Deng. He held Deng
Xiaoping responsible for not honoring his father,
Xi Zhongxun, & for removing the elder Xi from the Politburo
in 1962. As a result, Xi Jinping grew up in the countryside
in very difficult circumstances. He didn’t receive a proper
education, never went abroad, & never learned a foreign
language.

Xi Jinping devoted his life to undoing Deng’s influence
on the development of China. His personal animosity toward
Deng has played a large part in this, but other factors are
equally important. He's intensely nationalistic & he wants
China to become the dominant power in the world. He's also
convinced that the Chinese Communist Party needs to be a
Leninist party, willing to use its political and military
power to impose its will. Xi Jinping strongly felt this was
necessary to ensure that the Chinese Communist Party will
be strong enough to impose the sacrifices needed to achieve
his goal.

Xi realized that he needs to remain the undisputed ruler
to accomplish what he considers his life’s mission. He
doesn’t know how the financial markets operate, but he has
a clear idea of what he has to do in 2022 to stay in power.
He intends to overstep the term limits established by Deng,
which governed the succession of Xi’s two predecessors,
Hu Jintao and Jiang Zemin. Because many of the political
class and business elite are liable to oppose Xi, he must
prevent them from uniting against him. Thus, his first task
is to bring to heel anyone who is rich enough to exercise
independent power.

That process has been unfolding in the past year & reached
a crescendo in recent weeks. It started with the sudden
cancellation of a new issue by Alibaba’s Ant Group in Nov
2020 & the temporary disappearance of its former executive
chairman, Jack Ma. Then came the disciplinary measures
taken against Didi Chuxing after it floated an issue in
New York in June 2021. It culminated with the banishment
of 3 U.S.-financed tutoring companies, which had a much
greater effect on int'l markets than Xi expected. Chinese
financial authorities have tried to reassure markets but
with little success.

Xi is engaged in a systematic campaign to remove or
neutralize people who have amassed a fortune. His latest
victim is Sun Dawu, a billionaire pig farmer. Sun has been
sentenced to 18 years in prison and persuaded to “donate”
the bulk of his wealth to charity.

This campaign threatens to destroy the geese that lay the
golden eggs. Xi is determined to bring the creators of
wealth under the control of the one-party state. He has
reintroduced a dual-management structure into large
privately owned companies that had largely lapsed during
the reform era of Deng. Now private and state-owned co's
are being run not only by their management but also a
party rep who ranks higher than the company president.
This creates a perverse incentive not to innovate but to
await instructions from higher authorities.

China’s largest, highly leveraged real-estate company,
Evergrande, has recently run into difficulties servicing
its debt. The real-estate market, which has been a driver
of the economic recovery, is in disarray. The authorities
have always been flexible enough to deal with any crisis,
but they are losing their flexibility. To illustrate, a
state-owned company produced a Covid vaccine, Sinopharm,
which has been widely exported all over the world, but
its performance is inferior to all other widely marketed
vaccines. Sinopharm won’t win any friends for China.

To prevail in 2022, Xi has turned himself into a dictator.
Instead of allowing the party to tell him what policies
to adopt, he dictates the policies he wants it to follow.
State media is now broadcasting a stunning scene in which
Xi leads the Standing Cmte of the Politburo in slavishly
repeating after him an oath of loyalty to the party & to
him personally. This must be a humiliating experience, &
it's liable to turn against Xi even those who'd previously
accepted him.

IOW, he has turned them into his own yes-men, abolishing
the legacy of Deng’s consensual rule. With Xi there is
little room for checks & balances. He'll find it difficult
to adjust his policies to a changing reality, because he
rules by intimidation. His underlings are afraid to tell
him how reality has changed for fear of triggering his
anger. This dynamic endangers the future of China’s
one-party state.

https://www.wsj.com/articles/xi-jinping-deng-xiaoping-dictatorship-ant-didi-economy-communist-party-beijing-authoritarian-11628885076